SEC News Digest

Issue 2012-4 January 6, 2012

Commission Announcements

Commission Meetings

Closed Meeting on Thursday, January 12, 2012 at 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, January 12, 2012 will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; other matters relating to enforcement proceedings; and an adjudicatory matter.

At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.

ENFORCEMENT PROCEEDINGS

The Commission has sustained FINRA's findings that Dante J. DiFrancesco, a former registered representative with FINRA member firm Banc of America Investment Services, Inc., downloaded confidential nonpublic information concerning approximately 36,000 customers and transmitted that information to a competitor firm with whom he was to become associated. The Commission found that DiFrancesco's conduct was unethical and violated NASD Conduct Rule 2110. It further found that FINRA's sanctions of a $10,000 fine and ten-business-day suspension were not excessive or oppressive for his violations. (Rel. 34-66113; File No. 3-14195)

The Commission sustained FINRA disciplinary action against World Trade Financial Corp., a FINRA member firm, and three associated persons: Rodney Preston Michel, Jason Troy Adams, and Frank Edward Brickell. It also sustained FINRA's imposition of fines against the firm, Michel, Adams, and Brickell totalling $110,000 and suspensions against Michel, Adams, and Brickell for their misconduct.

The Commission found that World Trade and Brickell violated Section 5 of the Securities Act of 1933 and NASD Rule 2110 by unlawfully selling securities for their customers without a registration statement in effect or an available exemption. The security involved was iStorage, Inc., a little-known, thinly traded penny stock, which in late 2004 and early 2005 was subject of a spam e-mail campaign touting the sale of the stock on the Pink Sheets. According to the Commission's decision, Brickell and World Trade conducted "no inquiry" into their customers' proposed iStorage sales, despite indications that the sales were part of an illegal distribution. The Commission also found that, in connection with these unlawful sales, World Trade, Michel, and Adams failed to reasonably supervise Brickell and that World Trade and Michel failed to maintain adequate supervisory procedures in violation of NASD Rules.

In sustaining FINRA's sanctions, the Commission stated that Applicants' unregistered sales of securities and related supervisory failings "deprived investors of the protections afforded by the registration and disclosure requirements of the Securities Act." The Commission's Opinion stressed "that violations of the antifraud and other provisions of the securities laws frequently depend for their consummation . . . on the activities of broker-dealers who fail to make diligent inquiry to obtain sufficient information to justify their activity in the security." (Rel. 34-66114; File No. 3-14307)

In the Matter of Michael R. Pelosi

An Administrative Law Judge has issued an Initial Decision in Michael R. Pelosi, Admin. Proc. No. 3-14194. The Initial Decision finds that Michael R. Pelosi (Pelosi) knowingly or recklessly misreported account performance returns to his investment-advisory clients. As a result, Pelosi violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (Advisers Act). The Initial Decision orders Pelosi to cease and desist from committing or causing any violations or future violations of Sections 206(1) and 206(2) of the Advisers Act, bars him from association with an investment adviser or investment company, and orders Pelosi to pay a civil penalty in the amount of $60,000. (Initial Decision No. 448; File No. 3-14194)

SELF-REGULATORY ORGANIZATIONS

Proposed Rule Changes

The Commission issued notice of a proposed rule change submitted by NYSE Arca, Inc. (SR-NYSEArca-2011-97) pursuant to Rule 19b-4 under the Securities Exchange Act of 1934 relating to listing and trading of shares of the Teucrium Agriculture Fund under NYSE Arca Equities Rule 8.200. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66098)

The Financial Industry Regulatory Authority, Inc. has filed a proposed rule change (SR-FINRA-2011-075) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend the Code of Arbitration Procedure for Industry Disputes to preclude collective action claims from being arbitrated. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66109)

Immediate Effectiveness of Proposed Rule Changes

A proposed rule change filed by Chicago Mercantile Exchange, Inc. (CME) to establish certain fee programs in connection with its OTC Interest Rate Swap Clearing Offering (SR-CME-2011-22) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66102)

A proposed rule change filed by the International Securities Exchange, LLC (SR-ISE-2011-85) relating to a market maker incentive plan for foreign currency options has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66103)

A proposed rule change filed by NYSE Amex LLC amending its Price List to change the monthly fees for the use of ports that provide connectivity to its equity trading systems (SR-NYSEAmex-2011-107) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66104)

A proposed rule change filed by NYSE Amex LLC amending its Price List to eliminate the Clerk Badge Fee and the e-Broker Hand Held Device Fee (SR-NYSEAmex-2011-108) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66105)

A proposed rule change filed by New York Stock Exchange LLC to amend the Schedule of Rebates paid to Supplemental Liquidity Providers for providing liquidity (SR-NYSE-2011-73) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66106)

A proposed rule change filed by New York Stock Exchange LLC amending its Price List to change the monthly fees for the use of ports that provide connectivity to its equity trading systems (SR-NYSE-2011-72) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66107)

A proposed rule change filed by New York Stock Exchange LLC amending its Price List to (1) adopting a Trading License Fee for calendar year 2012 and (2) eliminating the NYSE e-Broker® Hand Held Device Fee and the NYSE e-Broker® Hand Held Device – Opening and Closing Order Imbalances Only (Together the “Hand Held Device fees”), the Fee for Approval of a Pre-Qualified Substitute, and the Badge Maintenance (SR-NYSE-2011-71) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66108)

A proposed rule change filed by NYSE Arca, Inc. (SR-NYSEArca-2012-01) amending the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services changing the monthly fees for the use of ports that provide connectivity to its equity trading systems has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66110)

A proposed rule change filed by the NASDAQ OMX PHLX LLC (SR-Phlx-2011-187) to waive PSX Port Pair fees for certain newly-added routable port pairs has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66111)

Approval of Proposed Rule Change

The Commission granted approval of a proposed rule change (SR-NYSEArca-2011-80) submitted by NYSE Arca, Inc. pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 and Rule 19b-4 thereunder to list and trade shares of the Rockledge SectorSAM ETF under NYSE Arca Equities Rule 8.600. Publication is expected in the Federal Register during the week of January 9. (Rel. 34-66112)

SECURITIES ACT REGISTRATIONS

The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.

Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

5.06

Change in Shell Company Status

6.01

ABS Informational and Computational Material.

6.02

Change of Servicer or Trustee.

6.03

Change in Credit Enhancement or Other External Support.

6.04

Failure to Make a Required Distribution.

6.05

Securities Act Updating Disclosure.

7.01

Regulation FD Disclosure

8.01

Other Events

9.01

Financial Statements and Exhibits

8-K reports may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.